Allegiant was founded in 1997 under the name WestJet Express.[1] After a trademark dispute with West Jet Air Center of Rapid City, South Dakota and with the name's similarity to WestJet Airlines of Canada, the airline adopted the name Allegiant Air and received its operating certificate for scheduled and charter domestic operations in 1998. The airline also has authority for charter service to Canada and Mexico. Wholly owned by Allegiant Travel, the airline has over 1,800 employees

In June 2001, Gallagher restructured the airline to a low-cost model and moved the headquarters and operations to Las Vegas, where they remain as of 2015[update]. Having formerly worked with WestAir and presided over ValuJet Airlines as CEO preceding the Flight 592 tragedy and thereafter, Gallagher led the airline's transformation into its present form, focusing on smaller markets that larger airlines did not serve with mainline aircraft. Gallagher remains Chief Executive Officer and Chairman of Allegiant.

In March 2002, Allegiant successfully exited bankruptcy and entered into a long-term contract with Harrah’s to provide charter services to its casinos in Laughlin, Nevada and Reno, Nevada. At the same time, the airline acquired its first McDonnell Douglas MD80 jetliner. From 2002 through 2004, the scheduled service business model was developed and by 2004, Allegiant was flying from 13 small cities to Las Vegas offering bundled air and hotel packages.

In November 2006, Allegiant filed a registration statement with the Securities and Exchange Commission in anticipation of a planned initial public offering of its Common Stock. It is listed on the NASDAQ Stock Market under the ticker symbol "ALGT".

On October 25, 2007, the airline opened a fourth focus city and operations base at Phoenix-Mesa Gateway Airport in Mesa, Arizona, connecting 13 cities already served by Allegiant and one new city to the Phoenix metropolitan area.[5] The airport announced a 10,000-square-foot (930 m2) expansion in August 2008, which increased the number of gates from two to four and allowed Allegiant to triple the number of flights from Phoenix. The expansion was funded by a loan from Allegiant which will be repaid by passenger fees.[6]

Along with Southwest Airlines, Allegiant was the only major United States airline to make a profit in the first quarter of the oil-driven economic crisis of 2008[citation needed]. Allegiant’s unique strategy has allowed the company to remain profitable in every quarter since 2003 – 39 consecutive quarters – despite industry challenges that include fluctuating fuel costs and an unstable economy[citation needed].

In March 2010, Allegiant purchased six used Boeing 757-200 jetliners as part of plans to begin flights to Hawaii, with deliveries from early 2010 to the fourth quarter of 2011.[11] It gained the approval for type with the FAA in July 2011,[12] and then worked with the FAA to obtain the appropriate ETOPS rating in order to be able to serve Hawaii. Allegiant currently operates nonstop Boeing 757 service to Honolulu from Bellingham, WA; Boise, ID; Eugene, OR; Fresno, CA; Las Vegas, NV; Phoenix/Mesa, AZ; Santa Maria, CA; Spokane, WA; and Stockton, CA, and also flies nonstop from Bellingham, WA to Maui. In addition to the Hawaii flights, Allegiant also flies the 757 on other routes, such as Grand Forks, ND – Las Vegas, NV and Rockford IL – Las Vegas, NV.

In November 2011, Allegiant closed its Long Beach facility and consolidated all Los Angeles area flights at Los Angeles International (LAX).

In May 2013, Allegiant Travel Company agreed to buy five office buildings containing about 130,000 square feet of space in northwest Las Vegas for $12.3 million. Allegiant expects to begin moving its corporate headquarters to the 10-acre property, located near Summerlin Parkway and Town Center Drive, in October 2014.[16]

Business model

Allegiant aims primarily to serve leisure travelers, particularly those in colder northern climates, going to warm-weather tourist destinations such as Punta Gorda, Tampa Bay, Las Vegas, Orlando, Los Angeles and Phoenix.[17] It also serves smaller destinations that see few direct flights by major carriers. Many of the airline's markets, such as Peoria, Illinois, are served only by commuter service requiring a connection at an airline hub.[18] In October 2009, Allegiant had competition on just five of its 136 routes.[19]

But elsewhere it flies into major airports, including McCarran International (Las Vegas) and Fort Lauderdale-Hollywood International Airport. In June 2013, Allegiant deviated from this strategy with plans to compete with Southwest Airlines by offering direct flights between Las Vegas and Austin, a medium hub served by 10 carriers with non-stop routes to over 40 destinations. The airline also flies less frequently compared to the major airlines, operating routes two or three times per week. That requires fewer crews and allows less time-pressured aircraft maintenance.

In February 2011, Allegiant proposed to sell two types of tickets to passengers: advance tickets at a fixed higher rate and time-of-departure tickets that cost less but may have fees added based on the price of aviation fuel.[22] In 2012, the U.S. Department of Transportation banned the practice as part of wider regulations that also require taxes and fees to be included in airfares. Allegiant, along with Spirit Airlines and Southwest Airlines, are suing the DOT to overturn these new rules.

Ancillary revenue

Like Ryanair, the low-cost airline owned by the Ryan family of Ireland, who also have invested in Allegiant, the airline seeks ancillary revenue to supplement ticket revenue.[23] These ancillary fees include those for checking luggage, carrying on luggage (other than a small personal item), buying food and drinks on board, obtaining advance seat assignments, paying by credit card, and more.[18][24][25] Allegiant CEO Maurice Gallagher said in 2009, "We collect $110 from you at the end of your trip. If I tried to charge you $110 up front, you wouldn't pay it. But if I sell you a $75 ticket and you self-select the rest, you will."[26]

Allegiant also earns commissions by offering hotel rooms, car rentals and admission to tourist attractions on its website. It sells package vacations under the brand name Allegiant Vacations. The company has arrangements with 34 hotels in Las Vegas and 21 in the Orlando and Daytona Beach, Florida areas. In 2008, the airline sold 400,000 hotel room nights.[26] Commissions on hotel and rental car packages is up to one-third of the airline's revenue.[24][26]

Allegiant had a contract to supply charter flights from Miami to four cities in Cuba beginning June 2009. One aircraft was committed to the contract.[28] The contract was for fixed-fee flying, meaning all the airline was required to do was provide the dry aircraft and the flight crew. The contractor was responsible for all other costs including fuel. However, Allegiant ended this service in August 2009.[31]

Costs

The airline tends to offer lower fares, which requires strict cost control.[18] Part of the airline's lower cost structure includes operation of MD-80 jets, which the airline can purchase and refurbish for as little as $4 million.[24] While the aircraft are less fuel-efficient than newer planes, Allegiant is able to purchase them outright for one-tenth the cost of a new Boeing 737 although Allegiant has purchased Boeing 757s and Airbus A320s.[23] Given the low cost of ownership, Allegiant is able to fly the planes less (seven hours per day versus 13 hours per day at JetBlue), which helps keep labor costs lower.[23] Overall, Allegiant operates with 35 full-time workers per plane compared to more than 50 at other carriers. Allegiant schedules their crew members so that they always return to their domicile at the end of the day, thus avoiding the need for hotel rooms which can be a costly expense for airlines.[24]

Allegiant maintains control over pricing by offering flights exclusively through its website, which also sells these ancillary products. It has no toll-free phone number and does not use Internet travel agencies.[18]

Criticism of the business model

Some airport officials have criticized Allegiant for shutting down routes or leaving markets quickly if they are not immediately profitable. In Kinston, North Carolina, the airport authority spent $60,000 to advertise Allegiant and asserted that the passenger load factor was 90% or better. They contend that the airline left the market when they did not earn enough ancillary revenue after only one year.[citation needed]

In Columbia, South Carolina, the carrier left in February 2007 after less than two months of daily flights to St. Petersburg, Florida, as loads started at 3/4 full and then dropped to half full by February.[34] Allegiant returned to Columbia in February 2009, but pulled out again in late 2009.

The airport director in Worcester, Massachusetts, felt that Allegiant reneged on a commitment to serve the airport for five years given the use of federal grants to assist its startup. However, the airline responded that the market was immediately unprofitable and starting service there was a poor decision; flights were reported to be 80% full.[34] Allegiant's flights average 90% full.[26]

The U.S. Department of Transportation cited the airline in 2009 for not including the "convenience fee" in the initial price quote on the website.[19]

Criticism of workers' right to organize

Flight attendants at the carrier voted to organize their workgroup under the Transport Workers Union of America in December 2010, citing scheduling concerns among other issues in their work rules and the airline's pilots elected to vote on whether to join the International Brotherhood of Teamsters in July 2012.[36] In August 2012, the pilots voted to organize and joined the Teamsters. [37] Allegiant's chairman and CEO, Maurice J. Gallagher Jr., has been critical of the unionization of airline employees and has stated that "Unionization is one of those things that clogs the arteries and makes you less quick and not as nimble as you need to be on top of your game... In this industry and others that are heavily unionized, you ultimately end up with bankruptcy as the primary driver" [36]

Destinations

As of April 2014, Allegiant flies 99 routes throughout the United States, mostly to smaller non-hub regional airports and mostly twice each week. It chooses its routes after calculating expected costs and revenue and adds or ends service to particular destinations as demand warrants.

Fleet

As of November 2014, the Allegiant Air fleet consists of the following aircraft:[38][39]

Allegiant Air is the only US-based carrier to have operated all five subtypes of the MD-80 series. On January 4, 2010, the SAS Group sold 18 surplus MD-80 series aircraft, built in the 1980s, to Allegiant Travel Company.[40]

In September 2010, Allegiant began to reconfigure their MD-80 fleet from 150 seats to 166 seats per plane. The project would involve removing galleys from the planes to add the 16 additional seats. All of the MD-80 conversions were completed by the end of September 2013.[43][44]

In July 2012, Allegiant announced the future addition of the Airbus A319-100 aircraft to its fleet. The aircraft are used and formerly belonged to easyJet and Cebu Pacific. Two former easyJet aircraft entered service in 2013, with another in 2014 and 6 in 2015.[45] In December 2012, Allegiant cancelled the agreement with Cebu Pacific citing an inability to agree on economic provisions.[46] On May 1, 2013, Allegiant purchased another A319 aircraft previously operated by easyJet and would enter service in the third quarter of 2013.[47] On February 23, 2015, Allegiant purchased 6 more A319s from Cebu Pacific which will be delivered starting this year until 2016.[48]

In 2013, Allegiant acquired 9 Airbus A320-200 aircraft from Spanish flag carrier Iberia.[49][50] Seven of the A320s were delivered in 2013 and were used for growth into new markets, including destinations in Mexico, the Rocky Mountains as well as airfields such as Charlottesville and Shenandoah Valley in Virginia and Trenton, New Jersey.[46] On February 24, 2015, Allegiant announces the purchase of 2 additional A320s from Philippine Airlines which will enter into service by 2015.[51]

Livery

Allegiant Air's livery features a bright sunburst design on the tail, emphasizing the airline's "sun" destinations. The livery has a bold, contemporary look that was created for the airline by Tiami Designs, Atlanta, Georgia.[52]

Two McDonnell Douglas MD-83 aircraft, one based in Las Vegas and one at Orlando-Sanford, are painted in this special livery to show its partnership with the Blue Man Group and their discounted ticket prices on board Allegiant Air flights.[54]

Several McDonnell Douglas MD-80 aircraft briefly featured ads for Bodog, an online casino. The ads, including plane wraps and onboard announcements, were originally scheduled to last three months. However, the ads lasted less than three months after Allegiant discovered that online gambling is illegal in the United States.[55]

Incidents and accidents

On March 29, 2007, an Allegiant Air MD-83, flight G4-758 from Portsmouth, NH to Orlando/Sanford, FL with 157 passengers on board, encountered hydraulic problems preventing the nose gear from extending. After about one hour of attempts to lower the gear by the flight crew, the pilot skillfully managed a safe landing at Sanford without the nose gear. The aircraft had significant structural damage but was later repaired and returned to service. The passengers were evacuated on the runway. One passenger sprained her ankle during the evacuation, however no other injuries were reported. This incident is similar to the landing gear incident of JetBlue Airways Flight 292. [56]